PPG Industries (NYSE: PPG) (“PPG”) and Georgia Gulf Corporation (NYSE: GGC) announced that the boards of directors of both companies have approved definitive agreements under which PPG will separate its commodity chemicals business and then merge it with Georgia Gulf. This business combination is expected to deliver enhanced value for the shareholders of both companies.

The terms of the transaction call for PPG to form a new company by separating its commodity chemicals business through a spinoff or split off, and then immediately merging the business with Georgia Gulf or a Georgia Gulf subsidiary in a Reverse Morris Trust transaction. The merger will result in PPG shareholders receiving approximately 50.5 percent of the shares of the merged company (“The Newly Merged Company”), with existing Georgia Gulf shareholders owning approximately 49.5 percent of The Newly Merged Company.

The transaction value of approximately $2.1 billion consists of $900 million of cash to be paid to PPG, approximately $95 million of assumed debt, about $87 million of minority interest, and Georgia Gulf shares to be received by PPG shareholders valued at $1.0 billion based on Georgia Gulf’s closing stock price on July 18, 2012. In the transaction, PPG will transfer related environmental liabilities, pension assets and liabilities and other post-employment benefits (OPEB) obligations to The Newly Merged Company.

Following completion of the transaction, which is expected to occur in late 2012 or early 2013, the combined company is expected to have annual revenues of approximately $5 billion and be the third-largest chlor-alkali producer and second-largest vinyl chloride monomer producer in North America.

The merged company will be led by Georgia Gulf’s President and CEO Paul Carrico and a senior management team comprised of both Georgia Gulf and current PPG commodity chemicals employees. The board of directors will consist of the eight existing Georgia Gulf board members and three new members to be designated by PPG, including Michael H. McGarry, who is currently senior vice president of PPG’s commodity chemicals business and will remain with PPG after the combination. The merged company will have approximately 6,400 employees working at more than 40 facilities, primarily in North America.

Barclays and Houlihan Lokey served as Georgia Gulf’s financial advisors, and Jones Day served as its legal advisor. Lazard served as PPG’s financial advisor, and Wachtell, Lipton, Rosen & Katz served as its legal advisor.